Houston American Energy (HUSA) is a small cap energy exploration and development company focused on natural gas and oil properties in southwest United States. Founded in 1981, the company owns interests in Texas, Louisiana and now Columbia. Despite its position in a favorable sector Houston American Energy has been the target of short sellers. With nearly 30% of the 16-million share float held short, HUSA has a huge crowd betting against it.

Although the massive percentage of short sellers and lack of employees is troubling, HUSA could be set up for a massive short squeeze. The average daily volume is just 150,000 shares, yet 4-million shares are held short. Based on these figures shorts would need 26 days to completely cover their positions. Shorts could give HUSA the fuel it needs to attack previous all time highs. While HUSA is far from a legitimate “long term” investment, it could squeeze higher in the near term. The chart shown shows clear support and resistance levels, along with a sharp breakout.

Note: Houston American Energy was attacked in 2010 by the legendary Andrew Left of Citron Research. While the report is truthful in nature, too many people piled into the wrong side of the trade short term. HUSA is now near all time highs and continues to squeeze higher despite negative research reports.